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The core activities of a full-service Investment Bank are generally classified into four main, revenue-generating divisions, often referred to as the four pillars. These divisions work together to serve governments, corporations, and institutional clients.
The four primary pillars of activity within a modern, large investment bank are:
This pillar is the advisory arm of the bank. It focuses on Accounting Services in Buffalo with complex strategic transactions and raising capital in the primary market (where new securities are created).
Mergers & Acquisitions (M&A) Advisory: Advising companies on buying other businesses (acquisitions), selling parts of their own business (divestitures), or combining with another company (mergers). The bank guides the client through valuation, negotiation, and deal execution.
Capital Raising (Underwriting): Assisting companies in obtaining financing by issuing new securities. This is split into:
Equity Capital Markets (ECM): Raising capital through the issuance of stock, such as an Initial Public Offering (IPO) or a Secondary Public Offering.
Debt Capital Markets (DCM): Raising capital through the issuance of bonds or other debt instruments.
This pillar operates as the market intermediary, facilitating the buying and selling of securities in the secondary market (where existing securities are traded) and providing liquidity for clients.
Sales: Relationship managers who communicate investment ideas, research, and trading strategies to large institutional clients (like hedge funds, mutual funds, and pension funds).
Trading: Specialists who execute transactions on behalf of clients or use the bank's own capital for proprietary trading (though proprietary trading is now heavily restricted post-financial crisis). They cover all asset classes, including Equities, Fixed Income, Currencies, and Commodities (FICC), and Derivatives.
This pillar focuses on managing the investment portfolios for the bank's clients, who range from high-net-worth individuals and families to large institutional investors.
Function: Portfolio managers and analysts actively manage funds, seeking to maximize returns based on client objectives and risk tolerance.
Products: This includes mutual funds, hedge funds, private equity funds, and separate accounts for managing wealth. It generates revenue through management fees charged as a percentage of assets under management (AUM).
The Research division's primary role is to provide in-depth analysis and intellectual capital to support the other three pillars.
Function: Analysts study specific companies, industries, asset classes, or economies and publish reports with investment recommendations (e.g., Buy, Hold, Sell ratings for stocks).
Support Role: Research analysts help the Sales team pitch ideas to clients, inform the Trading desk on market movements, and assist the IBD with industry knowledge for M&A and capital raising. Due to regulatory requirements, an "ethical wall" (the Chinese Wall) is maintained between Research and the IBD/S&T to prevent the misuse of non-public information.
While the four pillars describe the internal divisions, the entire bank ultimately serves two main external functions for its clients:
Advisory: Providing strategic Bookkeeping Services in Buffalo on corporate transactions (M&A, Restructuring). (Primary function of IBD)
Facilitation: Connecting capital seekers (corporations) with capital providers (investors) and facilitating the trading of securities. (Primary functions of ECM/DCM and S&T)
